Wal-Mart Settles "Employee Theft" Suit with Amazon.com

By Laabs, Jennifer | Workforce, June 1999 | Go to article overview

Wal-Mart Settles "Employee Theft" Suit with Amazon.com


Laabs, Jennifer, Workforce


In early April, Wal-Mart Stores Inc. settled an "employee theft" lawsuit with Amazon.com Inc. and drugstore.com, which alleged that the online bookseller and the health, beauty and wellness retailer hired computer system managers and onsite consultants away from Wal-Mart to steal trade secrets-namely, the department store chain's information systems which include data on sales, inventory and consumer buying habits. Wal-Mart, based in Bentonville, Arkansas, filed the suit in January, charging that Amazon.com targeted the employees, as well as Wal-Mart's software vendors, to gather competitive information.

In the settlement agreement, Amazon.com, based in Seattle, Washington, and drugstore.com, based in Redmond, Washington, agreed to reassign some of the former WalMart employees to other jobs that aren't similar to those jobs they previously held at Wal-Mart. Amazon.com has also agreed to return information obtained from former Wal-Mart employees.

Amazon.com has admitted no wrongdoing. The firm has agreed not to actively recruit any Wal-Mart employees for a year.

The settlement raises many human resources questions, including whether, and how much, a new employer can tap into employees' past work experience. "The settlement seems to reflect an appreciation for the concept of `inevitable disclosure,' which recognizes that employees could inevitably use or disclose confidential information learned in the course of their former employment," says David Barmak, an attorney with Sherman Meehan Curtin and Ain in Washington, D.C. "Companies invest a lot of money in developing and preserving confidential data, but don't always take appropriate steps to protect it from disclosure once an employee leaves." His recommendation: "Written non-competition and non-disclosure agreements provide additional, important protection for a company's competitively sensitive information."

However, in the Amazon.com case, employees brought more than just their experience with them. …

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